There is much talk about subsidies for high-speed broadband, but other causes are more deserving

IN HIS first radio address as president, Barack Obama spoke of “expanding broadband to millions of Americans”. Britain's prime minister, Gordon Brown, has likened his government's efforts to extend the country's digital infrastructure to “the roads and the bridges and the railways that were built in previous times” to stimulate the economy. Investing in broadband access sounds like a good way for governments to boost flagging economies. Digging up roads and laying all that optical fibre will create jobs; equipment-makers will have to crank out lots of new gear; and people for whom online commerce or remote working are today out of reach will be brought into the digital fold. One study suggests that increasing broadband penetration in a typical American state by a percentage point raises employment by 0.2-0.3% a year. The idea that governments should be pouring money into broadband seems so self-evident that operators and equipment-makers have been rubbing their hands with glee.

But as politicians announce their plans, they do not sound terribly ambitious. Mr Obama's $819 billion stimulus package would make just $6 billion available for expanding broadband access—much less than expected, and with too many strings attached, grumble would-be recipients. In Britain, meanwhile, a plan to subsidise fast new fibre networks seems to have been ditched in favour of an initiative to ensure that broadband is available to anyone who is prepared to pay for it—in other words, filling in gaps in rural areas rather than boosting the speed of existing connections. So much for Mr Brown's talk of a “communications revolution at a period when we want to stimulate the economy”, or Mr Obama's campaign promise that “every American should have the highest form of broadband access”. Grand words have given way to puny deeds.

Campaigners and industry lobbies are livid. But the case for large-scale government investment in broadband is not as strong as its proponents claim. When it comes to promoting economic activity, it is easy to see why having broadband is better than not having it, but most benefits are likely to come from wiring people up in the first place rather than making existing connections hum faster. In Japan and South Korea over 40% of households have fibre links capable of blazing speeds, but that does not seem to have resulted in more rapid economic growth, or the emergence of new applications unavailable to consumers with ordinary broadband. So focusing on the extension of access into new areas is the right approach. Alas, that will not involve laboriously digging up lots of roads. Investing in, for instance, retrofitting buildings to make them more energy-efficient would create far more jobs.

Another drawback with big state subsidies for broadband is that they could distort the market and create regulatory problems. Fibre networks are already being built by private companies in many countries; the prospect of handouts might cause them to delay their plans, in the hope that the state will pay for things they were going to do anyway. Weaker operators, unable to finance new networks, would certainly like governments to come to their aid. To ensure that governments do not end up creating new monopolies, it makes sense to insist that any firm that builds a network using state subsidies must also open it to rivals, unpopular though this is with those lobbying for aid.

Rolling out super-fast broadband for all, like motherhood and apple pie, is something that all politicians will claim to support. But when it comes to creating jobs and stimulating economic activity, it isn't the best use of government money.